It’s the constant change in the Asian markets that keeps me here. I’ve been based in Asia since 1987, spending twelve years with Burson-Marsteller in Hong Kong before moving to Singapore to become managing director, corporate relations at the Development Bank of Singapore (DBS). You get the chance to be closer to the action here in Asia than in other markets. For example, shortly after I landed in Hong Kong back in 1987 the stock market crashed and the exchange was closed for four days. Sitting in my new office, I asked some of my colleagues whether they knew any good contacts at the exchange. Then the phone rang. It was the legal counsel for the Stock Exchange of Hong Kong (SEHK), wanting to know what Burson-Marsteller could do to help the exchange through the crisis. Within half an hour I was ushered into the boardroom at the SEHK, and given a seat at the table next to the exchange’s chairman. If I had been based in New York or London, I don’t think that the chance to get so involved at the highest level would have come so quickly. The eyes of the world were on the Hong Kong market, so it was an exciting opportunity to have so soon after arriving.
I eventually moved to Singapore in 1999 because I’d reached a point where I felt I was in need of a change. When you work at an agency, you tend to make certain assumptions about life on the inside of companies, forever thinking about what you would do if you were sitting in that in-house seat. When it came time to leave I had several job offers, but most were for roles that I felt I had done before. Getting a new job gives you the opportunity to see just how good you really are, as you never know your full abilities unless you have been fully tested. And when it came to deciding where to go, I tilted towards Singapore because I had already spent so much time in Hong Kong.
Inside info
One of the first differences you notice between the two cities is in the stock markets. Serious investing in Hong Kong is challenged by a market that is fed on rumor, nourished by a culture of insider information. But something that both centers share is the fact that a good deal of the action in Asia surrounds companies which are either family controlled or run by a small number of very powerful shareholders. These firms operate for the benefit of their controlling shareholders, and the issue has sparked a raging debate about rights of minority investors. But this discussion is just an inevitable part of the development process for the Asian markets.
Already globalization is stimulating more attention on corporate practices in the region, and there are definite moves towards global practices in Asian markets as a whole. International investors are coming back, and this time they’re bringing with them certain expectations about governance and disclosure for companies they invest in, and if these expectations are not met, the investors will move on.
People are already cluing into this. Only a few years ago, it seemed we were in the midst of an Asian heyday and people thought they couldn’t lose money in the region. It was even rumored that some investment bankers were being compensated based on the amount of money they lent, never mind the amount they earned. But the 1997 financial crisis proved all that wrong. It fueled a new look at the equity markets from both companies and investors, as the debt markets closed themselves off to companies seeking finance.
1997 and all that
The fallout from the 1997 crisis made an impact on investor relations. Ten years ago you had to really sell IR to companies here, and sell it hard. If you were dealing with a controlling shareholder or a family-owned firm, they would often ask, ‘Why bother?’
Today that has changed. There are now more overseas listings from Asian companies and disclosure requirements in the region have increased. Indeed, until recently Hong Kong companies were required to report, but not effectively disclose. All they had to do was publish a summary of their results in one English-language and one Chinese-language newspaper, and that was it. You didn’t need IR to do that – just advertising. Contract with the ad agency and gather the numbers from the accountants and your disclosure requirements were met. This approach had a knock-on effect elsewhere. Companies, especially those with controlling shareholders, would often fail to return analysts’ calls. Thankfully, better corporate regulation has improved transparency.
Some countries are regulating their markets better than others. While the regulations across Asia are nowhere near as onerous as those in the US, Singapore is definitely one of the best regulated markets in the region. The local Business Times has released a Corporate Transparency Index for the first time this year. DBS scored 84/100, giving us third place behind Singapore Airlines and the winner, Singapore Technologies. We lost points because we do not yet report quarterly; that’s something we are working towards but it will be a long task because it’s a major systems issue.
My role as head of corporate relations gives my department and me a broad remit. The IR function is shared between us, the CFO’s office and corporate affairs, which is another separate department. We pay a lot of attention to the ratings agencies and we also usually arrange at least a couple of one-on-one analyst meetings every week. On top of that, we regularly participate in formal conferences in New York and London, and we hold regular conference calls with international investors along with large-scale analyst meetings.
The Singapore government is a major shareholder, owning about 40 percent of DBS. We generally have a small group of major holders, and though we do liaise with the government, this is not a direct relationship for corporate relations to maintain. Our stock is a marker for the Singapore exchange as a whole – many funds based here cannot afford not to have our stock, so we don’t have any trouble finding investors.
I am now entering the autumn of a long career, but I still pressure myself to do better in my job. I have a strong sense that I’ve been there, done that in my work, but I haven’t regretted it once – not a single decision – and in that respect I’m very lucky.
In so many companies, the IR function is accorded little respect compared to more traditional corporate departments. IR people need to fight in order to be accorded a useful status, and this depends on who you are and how good you are. If a company hires IR personnel simply to carry out orders and not contribute to policy, then to me that’s a waste of an IR person. You need to fight long and hard to ensure you get a seat at the table.
The key problem with IR is that it doesn’t attract enough quality people. It’s a bit of a chicken and egg situation – IR doesn’t attract enough top talent because it is not seen as a path toward reward and responsibility, but it doesn’t give enough reward and responsibility because there are not enough great people working in IR.
This problem is especially acute in Asia. Because there is no real history of investor relations, there is no-one around to teach others how to do the job well. I reckon that the ideal IR employee would be an analyst with an attention deficit disorder. You need to understand the market, the company and the figures, but a good IR person will be kept on their toes by the variety and the constant challenge this line of work can present.
